Distell’s full-year revenue grew 3.7% despite challenges

Distell Group, the South African wines, spirits and cider producer on Monday reported a 3.7% revenue growth for the full-year ended 30th June 2017. Revenue rose to R22.3bn ($1.72bn).

The company noted that its South African market which contributed 74% of group sales grew 7.8%, while volumes rose by 1.5%. The second-half of the year saw a marked improvement, with total volumes rising 5.4%.

The maker of Amarula cream liqueur and Savanna cider said that its spirits portfolio delivered strong revenue and volume growth, while the wine portfolio grew volumes and revenue amid increased competition from multinationals. The cider and ready-to-drink (RTD) portfolio reflected an improved sales mix as total volumes recovered in the second-half of the year.

The company which had been implementing efficiency improvements and cost containment initiatives across the business said that its results were impacted by a stronger rand – with foreign currency translation losses totally R65.6m ($430,000).

On the African continent outside of South Africa, the company delivered mixed results amid continued economic uncertainty and lower income from commodities. Revenue was maintained on sales volumes which declined 5.2%.

However, focus markets in Africa which includes Namibia, Kenya, Nigeria and Zimbabwe performed well, but the company’s overall performance was negatively impacted due to tough macroeconomic headwinds in Angola, which contributed 50.1% of foreign revenue.

In other international markets outside of Africa, the performance was resilient amid more challenging trading conditions and competition from other multinationals entrenching their dominant positions.

The firm announced in June its intention to restructure and simplify its multi-tiered shareholding structure through schemes of arrangement. The aim is to make it easier for investors to support valuation and mergers and acquisition potential in the future.

In August, the firm announced it had taken a 26% stake in Best Global Brands (BGB), a pan-African brand with established trading platforms with high quality local production facilities in Angola, Nigeria, Kenya and Zambia, for $54.6m (R730m).

Distell said it will acquire the remaining 74% stake in 2019, once operational targets are met.

Net profits for the full-year fell 15% to R1.3bn.

Looking ahead, the company said it will focus on growth through breakout category and geographic expansion, adding that it’s multi-category portfolio gives it an advantage in a competitive environment and tough trading conditions as consumers seek value at every price point.